Transcript Carmen Difiglio presentation on LCFS

Analysis of a Federal LCFS
(Sec 121 of Waxman-Markey Discussion Draft)
Carmen Difiglio
Asilomar Transportation Conference
July 29, 2009
The estimates and conclusions presented here do not reflect the views
of the U.S. Department of Energy. They are provided only to stimulate
discussion at the Asilomar Transportation Conference.
Outline of Presentation
• Definition of a “Federal LCFS”
• How a Federal LCFS Could be Met
• Upstream Emissions of Petroleum Fuels
(Including Canadian Oil Sands)
• Abatement of Oil Sands Emissions
• Biofuels with Current Policies
• Methodology
• Estimated Impacts of a Federal LCFS
• Conclusions
Original Waxman-Markey Discussion
Draft LCFS (= Federal LCFS)
• The average lifecycle emissions of transportation fuels
must be 5% lower than the baseline fuel by 2023 and
10% lower by 2030.
• From 2014-2022, the average lifecycle emissions of
transportation fuels must not exceed those of the
baseline fuel not counting the renewable fuels used to
meet the Renewable Fuels Standard.
• The baseline fuel is defined to be the average fuel sold
into U.S. commerce during 2005.
• This section was deleted from HR 2454. It was used as
a proxy to model a “Federal LCFS.”
Ways a Federal LCFS Could Be Met
Things to do:
• Use biofuels with reduced CO2 emissions.
• Increase refinery efficiency.
• Use refinery feed stocks that have lower life cycle
emissions.
• Purchase credits, including credits from nonobligated parties such as utilities that sell electricity
for EVs/PHEVs.
Things not to do:
• Use more Canadian oil sands refinery feed stocks or
heavy crude feed stocks.
• Use coal-to-liquid fuels.
Well-To-Wheels GHG By Process
CA ULSD
Crude Production
7%
Crude Transport
1%
Crude Refining
12%
Product Transport
<0.5%
Tank to Wheel 79%
Source: Detailed California-Modified GREET Pathway for Ultra Low Sulfur
Diesel (ULSD) from Average Crude Refined in California, CARB, Feb 28 2009
Upstream GHG Emissions By Feedstock
Source: “An Evaluation of the Extraction, Transport and Refining of Imported Crude Oils and
the Impact on Life Cycle Greenhouse Gas Emissions”, DOE/NETL-2009/1362, March 27, 2009
Mitigating the GHG Emissions of Oil Sands
• Most petroleum emissions are downstream
– For conventional feedstock to ULSD WTW upstream <25% total
– Wide variety for conventional crude Bonnie Light to Arab Medium
~10%
– With some overlap oil sands pathways ~10% higher than
conventional crudes
• Ways to mitigate GHG
– Improve energy efficiency (cogen, refinery ops, SOR)
– Add CCS for heat supply (partial remediation)
• Long-term (commercial, at least a decade off)
• At least $100/ton (natural gas /post-combustion capture)
• Add $8/barrel bitumen (discounted ~50% to WTI)
• Alternate fuels (pet coke, bitumen) or technologies
(gasification) with CCS more expensive
– Exotic proposals – nuclear
• Size mismatch for conventional unit; no approved small
designs (e.g., PBMR)
• High cost, decades away from deployment, uncertain (must be
developed for other markets before it would be available for
this application).
Federal Renewable Fuel Standard
(RFS fuels can not be counted towards the Federal RFS until after 2022.)
Renewable Fuels Standard
Billion Gallons .
40
35
30
25
20
15
10
5
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Biodiesel
0
0
0
0.5 0.65
0.8
Any Advanced
0
0
0
0.1
0.2
0.3
0.5 0.75
0.1
0.25
0.5
Cellulosic Advanced
1
1
1
1
1
1
1
1
1
1
1
1
1
1.5
2
2.5
3
3.5
3.5
3.5
4
1.75
3
4.25 5.5
7
8.5 10.5 13.5
16
Any Renewable Fuels
4
4.7
9
10.5
12
12.5 13.2 13.8 14.4
15
15
15
15
15
15
15
15
Old RFS
4
4.7
5.4
6.1
6.8
7.4
7.8
7.9
8.1
8.2
8.3
8.4
8.5
8.6
7.5
7.6
7.7
Billion Gallons Ethanol Equivalent .
The RFS Already Maximizes U.S. LowGHG Biofuel Use Through 2025
RFS gap
40
Biodiesel
imports
30
Sugar
F-T Cellulosic
B-C Cellulosic
20
Biodiesel
U.S.
10
B-C Cellulosic
F-T Cellulosic
Grain
0
2010 2015 2020 2025 2030 2010 2015 2020 2025 2030
EIA AEO 2008
WBS Reference Case
• The 2008 AEO & a 2008 DOE Policy Analysis Office study
project that RFS2 cellulosic biofuel waivers will be required
through 2030 (AEO) or 2025 (Policy Analysis Office). Since
then, the recession has further delayed investment.
9
Models Used for this Study
Global Energy Technology Perspectives (IEA-ETP)
– 15 regions
– Developed at IEA with ETSAP
– Calibrated to WEO
Ten Region U.S. MARKAL Model
– Key Regional Differences
»
»
»
»
»
Fossil fuel and renewable resource availability
Economic and population growth rates
End-use demand patterns and levels of energy intensity
Energy infrastructure and transportation options and costs
Policies and regulations
– Calibrated to AEO
MARKAL Model Improvements
Implemented for this Study
• Introduced framework for tracing carbon
intensity of liquid fuels.
• Introduced market for tradable LCFS credits.
• Introduced State LCFS regulations as
outlined by CARB, a Federal LCFS policy as
outlined in original Waxman-Markey draft
and assumed anti-backsliding regulation.
Modeling Scenario
• It is assumed that the Alberta oil sands producers
would react to a Federal LCFS “lock out” by building
the Enbridge pipeline to Kitimat to permit oil sands
exports to Asian markets.
• This is estimated to delay expanded oil sands
production by 5 years.
• While alternative sources of process energy and CO2
capture and storage could reduce the upstream
emissions of oil sands processing, it is assumed that
these technologies would take time and would not
deter expanded production of oil sands using current
technologies.
How the LCFS is Met in 2030
• Approx. 275 million tonnes of CO2
equivalent credits are required by 2030.
Sugar ethanol
4%
Corn Ethanol
3%
BTL
22%
Cellulosic ethanol
54%
PHEV electricity
1%
Biodiesel
1%
Reductions from
refining and
upstream
15%
13
The RFS leads to increased US
demand for low-GHG biofuels in 2030
Billion gallons of ethanol equivalent
50
Biodiesel imported
45
40
Biodiesel
35
BTL - imported
30
25
BTL
20
Cellulosic ethanol - imported
15
Cellulosic ethanol
10
Sugar Ethanol - imported
5
Corn Ethanol
0
2010
2015
2020
2025
Reference case
2030
2010
2015
2020
2025
2030
LCFS case
The LCFS does not lead to increased biofuel production until after
2025, when a substantial increase is required. The majority of the
increased supply has to be purchased in international markets,
since US supply is already close to the maximum feasible.
14
Impact of LCFS on World and U.S.
Biofuels Use
• High oil prices and world-wide policy incentives
already provide strong incentives for biofuels
production. The main impact of the LCFS is to divert
biofuels from other markets
Billion gallons ethanol equivalent
120
LCFS case global supply
100
80
Reference case global supply
60
LCFS case US supply
40
Reference case US supply
20
2010
2015
2020
2025
2030
Alberta Oil Sands
The US LCFS limits flow of oil sands to the USA, but only
marginally reduces overall oil sands production.
Reference case 2025
LCFS case 2025
0.6
mbpd
3.4
mbpd
0.7
mbpd
2.0
mbpd
1.2
mbpd
Impact of U.S. LCFS on CO2 Emissions
Relative to our Reference Case, the US LCFS limits leads to significant reductions
in emissions attributed to the LCFS, but these reductions are largely offset by
increased emissions in the rest of the world: Canadian oil sands go elsewhere &
most increased biofuel use is at the expense of biofuel use elsewhere.
Conclusions
• High oil prices & current world-wide policies already
provide strong incentives for low-emission biofuel
production.
• A national LCFS* is not estimated to:
– significantly increase world-wide biofuel production.
– discourage production of petroleum feed stocks with higher GHG
emissions.
– appreciably reduce world-wide carbon emissions.
• The average cost per ton of reduced CO2 emissions is
$300, not counting the energy security cost of relying on
2 MBD more oil from the Middle East instead of Canada.
• The LCFS allowance value would be an order of
magnitude lower.
* As defined in Sec. 121 of the W-M discussion draft.
Designing a Better LCFS
• A more effective LCFS could be developed if it were designed to be
a more targeted policy instead of “silver-bullet” to promote all lowcarbon alternatives to petroleum fuels.
• In particular, a LCFS could be designed to replace the current
volume-based Renewable Fuel Standard and encourage increased
investment in sustainable low-carbon biofuels.
• Control of the upstream emissions of petroleum feedstocks might
be best addressed in a cap-and-trade allowance program. This
would not divert Canadian oil sands to other markets & would
encourage reductions in upstream oil sands emissions.
• Better policies than LCFS available to commercialize PHEVs & EVs:
– Battery development (e.g., DOE’s battery RD&D).
– Grants and loans to vehicle manufacturers and infrastructure (e.g.,
ARRA expenditures; Sec. 121-125 of HR2454).
– Tax credits to purchase vehicles (e.g. ARRA’s $7,500 credit for PHEVs)
– Inclusion of PHEVs as an available technology to meet CAA GHG
emissions standards for light duty vehicles.